How to set credits for ecosystem services on the international market?

Summary of 2023 Pre-Forum event

Thursday, Apr 06, 2023

“Can we put a price on nature? Maybe not. Can we say that nature is for free? I don’t think so. And losing nature that is for sure expensive.” Jurgen Tack.

The international market for ecosystem services is gaining momentum. As global warming and biodiversity loss become more visible, governments, companies, and individuals become more interested in financially contributing to the protection and restoration of our nature. This demand creates an opportunity for a private biodiversity credits market, which can contribute to fill the finance gap for voluntary nature conservation initiatives. But can we put a price on nature?

Before voluntary carbon and biodiversity markets can become mainstream, questions need to be answered to convince potential providers and give them greater confidence. The ENPLC organized therefore the event “How to set credits for ecosystem services on the international market”, with the support of the ELO and the Forum for the Future of Agriculture. 80 Participants from all over Europe joined the discussion in the prestigious Palais des Academies in Brussels on Monday 27th March. Between them also our project partners ADEPT, FPG, ANB and EUROSITE. For partners who could not physically attend an online pre-discussion was organized and questions were passed along to the moderator of the discussion.

DG Agriculture took the first steps towards establishing this payment system by developing a carbon certification system and evaluation through carbon farming. But the services that ecosystems provide go beyond carbon sequestration, as biodiversity, fresh air, and fresh water are all crucial services that should be rewarded. Setting these credits still requires discussion on a various range of topics, including valuing and monitoring biodiversity and the role of each stakeholder on the short and long term.

Meredith Reisfield, director for Sustainability Policy & Strategic Partnerships at Indigo emphasized that to ensure the durability of these payment schemes, three critical aspects must be considered: integrity, durability, and credibility. Quantification of the impact of ecosystem services is necessary to ensure credibility, and satellite data, biochemical models, and data collection are useful tools for measuring ecosystem services. Indigo’s carbon program focuses on supporting regenerative agriculture practices at scale, sustainable programs for farmers, and conservatively measured greenhouse gas reductions. However, inevitable and avoidable reversals must be considered, as they can impact the sustainability of such programs.

Georg Koenig stressed that businesses have a role to play in protecting the environment and land, as marketing pressure from consumers, financial institutions’ push, and regulatory pressure put pressure on agriculture and forestry value chains. He talked as a representative of the start-up Kiebitz, a German organization that supports companies to invest in natural capital and create hight quality nature-based solutions that build biodiversity, sequester carbon and regenerate the ecosystem. The switch to regenerative practices can lead to a monetary yield improvement of up to 60%. Digital infrastructure that caters to both agriculture and companies is essential to create credits, and easy transactions, limited bureaucracy, and pilot projects can help facilitate the process.

Certification using tailored methodologies, third-party verification, and a certificate of compliance are needed to ensure the reliability and public registration of such programs. Giulio Volpi from DG CLIMA made therefore the link with the EU regulation on carbon removals certification to learn from.

From the users perspective Cristi Gherghiceanu from Fundatia ADEPT Transilvania discussed the challenges faced by small NGOs working with farming communities in the middle of Romania. The use of increasing large machinery reduces the mosaic management of the landscape, and more grassland conversion into arable land is occurring. Agro-environmental payments are not high enough to incentivize farmers to maintain grassland landscapes. The NGO has implemented a biodiversity carbon credit scheme that involves 25-year annual payments and accreditation by Plan Vivo. Metrics such as landscape scale, avoidance of loss, and biodiversity are used to quantify the benefits of the program.

Luc Groot from the Dutch Federation of Private Landowners emphasized that the focus should be on creating a robust voluntary market for carbon removals and providing ecosystem services rather than obliging landowners to participate. Communication with landowners should ensure that they can feel part of the solution rather than being burdened with more rules.

Proper monitoring systems that take into account the geography and specificity of the area and accurately measure the progress and impact of the land restoration efforts will be essential to establish and maintain a reliable market for ecosystem credits. Furthermore, customized programs tailored to the needs of individual landowners will encourage long-term commitment to restoration efforts, especially for those just starting.

While ecosystem credits can be an effective tool to incentivize restoration efforts, they should not be viewed as a standalone solution. There is a need for a very comprehensive approach integrating with other conservation strategies and for customised approaches, long term thinking, incentive creation and a strong engagement of the private sector. Some services, such as soil carbon storage, may be less visible to people than other. Therefore, a comprehensive approach with respect for the interconnectedness of ecosystem services is necessary to achieve long-term success in restoration efforts. Setting credits for ecosystem services on the international market will require the quantification of these services, the use of digital infrastructure, and the involvement of businesses, NGOs, governments, and landowners.

Ecosystem credits can provide mechanisms for conserving as well as protecting habitats. The credibility and durability of these schemes are vital for ensuring their sustainability and their positive impact on the environment. While challenges exist, the global push towards protecting and restoring nature provides a unique opportunity to create a robust voluntary market for ecosystem services, with shared efforts across regions and countries.

You can watch the whole event on our videos page.

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